Floodwater undermines coal accord

The Queensland government and Australia’s largest coal producers have struck a compromise deal that will allow miners to release water from their operations in central Queensland next wet season to avoid a repetition of the lost production that followed this year’s floods.

While the more flexible rules will assist companies such as
BHP Billiton
,
Rio Tinto
and Xstrata to deal with any future flooding, it will not help with the 500 gigalitres of water – the equivalent of Sydney Harbour–that remains in mine pits throughout the Bowen Basin.

The flooded pits contributed to a shortfall of up to 40 million tonnes in coal exports, worth $7 billion, last financial year. This has had a major impact on Queensland and Australia’s economic growth as well as the amount of coal royalties flowing into state coffers.

Coal companies are spending tens of millions of dollars to pump out excess water to enable them to mine their pits, because environmental regulations mean they cannot pump the water out into nearby creeks or rivers, especially out of the wet season.

Queensland Resources Council chief executive Michael Roche said the industry was happy with the more flexible arrangements proposed for next summer but companies were frustrated that the changes had not been implemented before the recent summer’s floods.

“They are more sensible rules but we would have preferred they were in place two years ago," he told The Australian Financial Review.

“The industry now has a set of conditions which means they will be in better shape to handle above-average rainfall in the up-coming wet season," Mr Roche said.

“However, they are not so generous to offer much prospect for mines to deal with the legacy of water they already hold." Three-quarters of Queensland’s 57 coalmines were affected by the summer’s heavy rain, with 54 mines needing special approvals from the state government to deal with efforts to release excess water.

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While some companies have been able to release water and return to full production, excess water has been an on-going issue for coal producers in central Queensland.

Coal exports from Queensland fell back to 12.7 million tonnes in July after reaching 14.7 million tonnes in June – the best month for the industry since November 2010.

The 12.7 million tonnes exported last month was 13 per cent below July last year and the lowest export volume for that month since 2006.

Coal companies have experimented – with mixed success – with new ways to disperse the extra water, such as by irrigation, water treatment and evaporation.

The new rules for the discharge of water negotiated between the Department of Environment and Resource Management (DERM) and the coal industry can be adapted for each mine, depending on where they sit in the catchment.

Importantly, the rules will give coal producers more opportunities to release excess water during high river flows while still meeting environmental standards.

DERM has previously defended the permit systems used last summer.

A spokesman for Xstrata Coal said the miner supported more practical solutions that would allow more timely, controlled discharges of water.

The company, which is the majority owner of the Rolleston open-cut mine, west of Gladstone, was looking into new ways to deal with extra water.

“We are currently investing significantly into capital works to alleviate water-management issues more efficiently across all of our sites," the Xstrata spokesman said.